Shell takes venture fund into 'explosive' Chinese market

AMSTERDAM (Reuters) – Royal Dutch Shell is opening the first Chinese office of its venture capital fund and recruiting three local investment staff there to tap a market where it sees “explosive” growth, the head of the business told Reuters on Thursday.

Shell Technology Ventures (STV), internally known as “Stevie”, is the oil major’s vehicle through which it seeks to stay on top of technological changes in the energy market that could threaten its business, and provide new areas for growth.

The 20-year-old fund has made a notable switch from its traditionally oil-oriented investments to experimenting in businesses completely new to the oil giant, such as generating electricity using kites or optimizing delivery services.

STV is now taking aim at the huge Chinese market, searching for profitable start-ups, as well as helping to bring Western technology to Chinese customers.

“The Chinese venture market is booming, exploding is a better word,” STV Managing Director Geert van de Wouw told Reuters in an interview in Amsterdam, outlining the fund’s expansion plans and its investment criteria.

“What you see now is Chinese engineers based in Silicon Valley and Europe that see market opportunities and go back to China to set up their own shops,” he said.

Shanghai will host STV’s sixth global office and add three more employees to a staff of 24. STV has so far invested in China through GRC SinoGreen Fund, a Chinese greentech venture capital fund targeting energy and materials-related start-ups.

Van de Wouw did not disclose STV’s size but said it typically invested $ 2.5 million to $ 5 million during the initial investment phase, with up to $ 20 million over the full investment lifecycle.

Growing in China and adding more staff mean the fund will accelerate investments. “We are going to do more deals,” he said. In 2016, the fund invested in eight start-ups.

The growing electrification of the world’s energy systems, coupled with decentralized production and demand for cleaner fuels means large, traditional energy companies like Shell are forced to explore new business models.

“STV is really a strategic resource where we are the window to the world for Shell New Energies to give insights into how the new energy domain will develop,” van de Wouw said.

The fund is weighing investments in areas like battery storage, using solar power generation for micro grids and even smart mobility that van de Wouw said he expected to be dominated by autonomous, electric vehicles.

Shell has already tapped some of its fund’s investments for application within its own business. For example, it used its investment in German logistics company Tiramizoo to optimize its retail business in the Philippines, saving the company costs.

A team of implementation managers ensures more of STV’s start-ups can bring fresh ideas to Shell as its diversifies from its oil roots.

Reporting by Karolin Schaps; Editing by Edmund Blair

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Nvidia hits another record high as AI takes centerstage

(Reuters) – Shares of Nvidia Corp touched a record high for the second straight day on Monday following yet another steep increase in the chipmaker’s price target by a Wall Street analyst.

Nvidia’s shares, valued at a low $ 23.3 in 2015, have since surged to hit a high of $ 190.10 on Monday, with at least four brokerages setting their price targets at $ 200 or above.

Analysts have focused on the company’s progress in artificial intelligence, in particular.

“Our sense is management believes that investors still severely underestimates the impact of AI and the size of the potential market,” Evercore analyst C J Muse wrote in a note on Friday after hosting Nvidia’s management.

Nvidia has been rapidly expanding into newer technologies including artificial intelligence, cloud computing and self-driving cars, away from designing graphics-processing chips for which the company was known for.

Bank of America Merrill Lynch analyst Vivek Arya listed Nvidia a “top pick”, basing his view “on (Nvidia‘s) underappreciated transformation from a traditional PC graphics vendor, into a supplier into high-end gaming, enterprise graphics, cloud, accelerated computing and automotive markets,” according to Seeking Alpha.

Arya raised his price target on Monday by $ 25 to $ 210, the second highest on the Street. Evercore ISI’s whopping $ 70 price target raise on Friday to $ 250 is currently the highest.

Wall Street is bullish on the stock, with 22 of 38 brokerages having a “buy” recommendation, as per Thomson Reuters data. Twelve have “hold” and 4 have “sell” rating.

Broadening its push into AI, Nvidia has been partnering with auto makers to help develop self-driving vehicles.

In May, Nvidia announced a partnership with Toyota Motor Corp through which the Japanese car maker would use Nvidia’s AI technology to develop self-driving vehicle systems planned for the next few years.

“NVDA has created an industry standard for AI systems that will be nearly impossible to replicate,” Evercore’s Muse wrote in a note on Friday.

Nvidia is also gaining from rising demand for its chips used to process cryptocurrency transactions.

However, the company has little room for any missteps.

Nvidia’s shares fell last month after the company’s second-quarter revenue in its data center and automotive businesses missed estimates.

Reporting by Aishwarya Venugopal and Arjun Panchadar in Bengaluru

Our Standards:The Thomson Reuters Trust Principles.